PLANNED GIVING
Our second in a series of planned giving article is on Charitable Gift Annuities.

What is a gift annuity? It's a gift of cash or marketable securities from a donor to a charitable organization in exchange for a current income tax deduction and the organization's promise to make fixed payments to the donor for life. The payments are computed based on the age of the donor; life expectancy and a remainder gift of approximately 50% of the original gift to go to the charity upon the donor's death. Simply put, the donor needs additional income, (otherwise he/she could make an outright gift to the charity) but would still like to leave something to a favorite charity when he or she dies.

These gift annuities are popular with large religious, charitable and educational institutions because they have the general assets and reserve funds necessary to accept the funds and carry out such agreements. On the other hand, the small charities do not have the assets nor could they accept the liability.

BUT don't let these donors get away!

There is a way for the small charities to structure an arrangement through a commercial insurance carrier. Your donor can receive the same income and still make a similar gift to the charity using a combination of an immediate annuity and a single premium life insurance contract. In this way, the charity has none of the liability or management risk associated with the gift annuity and will still receive a charitable gift from their donor. By discussing this idea with your donors, it allows them to achieve their objectives (current income and a charitable gift) without putting any undue risk on their favorite charity (a win-win situation).

By ADO member ROBBY MORRIS, Insurance and Personal Planning, The Morris Group, 914-273-6301; www.robbymorris.com; morrisrw@ft.newyorklife.com.